ALBERT EDWARDS: I Cannot Suppress My Anger Any More, The UK Is Putting Young People Into Indentured Servitude

Albert Edwards, the famously bearish strategist at Societe
Generale, has a new note that goes to town on U.K. chancellor
George Osborne, who, as part of his budget plan unveiled in
March, proposed that the U.K. get more involved in subsidizing
mortgages.

Edwards has decided that he can no longer keep his mouth shut on
the matter, and must lash out at this horribly misguided policy.

George Osborne in his March budget proposed an unusually
misguided piece of government interference in the housing market.
The measures will see government provide lenders with a guarantee
of up to 20 per cent of a mortgage in an attempt to encourage
lending to borrowers with small deposits. This means that if a
borrower defaults on a loan, the taxpayer will be liable for a
proportion of the losses. Numerous critics of George Osborne's
scheme range from the IMF to the outgoing Bank of England
Governor Mervyn King, who said "We do not want what the US has,
which is a government-guaranteed mortgage market, and they are
desperately trying to find a way out of that position."

He goes on to express the viewpoint that house prices are already
way too high.

He points to this chart, showing how high U.K. prices are
relative to other countries.

SocGen

In the end, he says, this is mere indentured servitude of the
youth, under a crushing burden of debt:

What makes me genuinely really angry is that burdening our
children with more debt (on top of their student loans) to buy
ridiculously expensive houses is seen as a solution to the
problem of excessively expensive housing. I would have thought
the lack of purchasing power should contribute to house prices
declining or stagnating (relative to incomes), hence becoming
affordable once again.

You would have thought that George Osborne would be ideologically
predisposed to a market solution, wouldn't you? But apparently
not. Why are houses too expensive in the UK? Too much debt. So
what is George Osborne's solution for first time buyers unable to
afford housing? Why, arrange for a government guaranteed scheme
to burden our young people with even more debt! Why don't we call
this policy by the name it really is, namely the indentured
servitude of our young people.